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Aztec Engineering Group, Inc. v. Liberty Mutual Insurance Co.

United States District Court, S.D. Indiana, Indianapolis Division

April 18, 2017



          Hon. Jane Magnus-Stinson, Chief Judge

         Plaintiffs Aztec Engineering Group, Inc., and Tecnica y Proyectos S.A. (collectively, “Aztec-TYPSA”) have filed a claim on a Payment Bond issued by Defendants Liberty Mutual Insurance Company, Fidelity and Deposit Company of Maryland, XL Specialty Insurance Company, and American Home Assurance Company (collectively, the “Co-Sureties”) pursuant to a Public-Private Agreement between the Indiana Finance Authority (“IFA”) and I-69 Development Partners LLC (the “Developer”) for design and construction work on Section 5 of the I-69 expansion from Bloomington and Martinsville (the “Project”). Aztec-TYPSA seeks payment from the Co-Sureties for design work it did for Isolux-Corsán, LLC (“Isolux-Corsán”), [1] which was the general contractor on the Project. The Co-Sureties denied Aztec-TYPSA's claim. Aztec-TYPSA and the Co-Sureties have filed cross-motions for summary judgment, presenting diametrically opposed interpretations of the contracts at issue but each contending that summary judgment is appropriate for the reasons stated therein. [Filing No. 32; Filing No. 47.] For the reasons that follow, the Court enters summary judgment in favor of Aztec-TYPSA and awards it $4, 678, 451.61 plus prejudgment interest.


         Applicable Standard of Review

         A motion for summary judgment asks the Court to find that a trial is unnecessary because there is no genuine dispute as to any material fact and, instead, the movant is entitled to judgment as a matter of law. SeeFed. R. Civ. P. 56(a). As the current version of Rule 56 makes clear, whether a party asserts that a fact is undisputed or genuinely disputed, the party must support the asserted fact by citing to particular parts of the record, including depositions, documents, or affidavits. Fed.R.Civ.P. 56(c)(1)(A). A party can also support a fact by showing that the materials cited do not establish the absence or presence of a genuine dispute or that the adverse party cannot produce admissible evidence to support the fact. Fed.R.Civ.P. 56(c)(1)(B). Affidavits or declarations must be made on personal knowledge, set out facts that would be admissible in evidence, and show that the affiant is competent to testify on matters stated. Fed.R.Civ.P. 56(c)(4). Failure to properly support a fact in opposition to a movant's factual assertion can result in the movant's fact being considered undisputed, and potentially in the grant of summary judgment. Fed.R.Civ.P. 56(e).

         In deciding a motion for summary judgment, the Court need only consider disputed facts that are material to the decision. A disputed fact is material if it might affect the outcome of the suit under the governing law. Hampton v. Ford Motor Co., 561 F.3d 709, 713 (7th Cir. 2009). In other words, while there may be facts that are in dispute, summary judgment is appropriate if those facts are not outcome determinative. Harper v. Vigilant Ins. Co., 433 F.3d 521, 525 (7th Cir. 2005). Fact disputes that are irrelevant to the legal question will not be considered. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986).

         On summary judgment, a party must show the Court what evidence it has that would convince a trier of fact to accept its version of the events. Johnson v. Cambridge Indus., 325 F.3d 892, 901 (7th Cir. 2003). The moving party is entitled to summary judgment if no reasonable fact-finder could return a verdict for the non-moving party. Nelson v. Miller, 570 F.3d 868, 875 (7th Cir. 2009). The Court views the record in the light most favorable to the non-moving party and draws all reasonable inferences in that party's favor. Darst v. Interstate Brands Corp., 512 F.3d 903, 907 (7th Cir. 2008). It cannot weigh evidence or make credibility determinations on summary judgment because those tasks are left to the fact-finder. O'Leary v. Accretive Health, Inc., 657 F.3d 625, 630 (7th Cir. 2011). The Court need only consider the cited materials, Fed.R.Civ.P. 56(c)(3), and the Seventh Circuit Court of Appeals has “repeatedly assured the district courts that they are not required to scour every inch of the record for evidence that is potentially relevant to the summary judgment motion before them, ” Johnson, 325 F.3d at 898. Any doubt as to the existence of a genuine issue for trial is resolved against the moving party. Ponsetti v. GE Pension Plan, 614 F.3d 684, 691 (7th Cir. 2010).

         “The existence of cross-motions for summary judgment does not, however, imply that there are no genuine issues of material fact.” R.J. Corman Derailment Servs., LLC v. Int'l Union of Operating Engineers, 335 F.3d 643, 647 (7th Cir. 2003). Specifically, “[p]arties have different burdens of proof with respect to particular facts; different legal theories will have an effect on which facts are material; and the process of taking the facts in the light most favorable to the non- movant, first for one side and then for the other, may highlight the point that neither side has enough to prevail without a trial.” Id. at 648. Put another way, cross-motions for summary judgment do not waive the right to a trial and, instead, are treated separately. McKinney v. Cadleway Properties, Inc., 548 F.3d 496, 504 (7th Cir. 2008).



         The facts necessary to decide the pending cross-motions for summary judgment are undisputed.[2]

         A. The Project and the Public-Private Agreement

         The Project involves upgrading approximately 21 miles of existing State Route 37 through and around Bloomington and Martinsville. [Filing No. 33-1 at 1.] To carry out the Project, the IFA entered into a Public-Private Agreement (the “PPA”) with the Developer on April 8, 2014. [Filing No. 33-3 (portions of the PPA); Filing No. 50-4 (the fifty page Abbreviations and Definitions section of the PPA).][3] The PPA acknowledges the intention of the State of Indiana “to facilitate private sector investment and participation in the development of the Project via a public-private agreement.” [Filing No. 33-3 (citing Indiana Code Article 8-15.5 (“Public-Private Agreements for Toll Road Projects”).]

         A section of the PPA titled “Payment and Performance Security” includes a subsection titled “Design and Construction Security Requirements, ” which provides as follows:

17.2 Payment and Performance Security
17.2.1 Design and Construction Security Requirements As a further condition precedent to commencement of any Construction Work, Developer shall have obtained, delivered to IFA and main lain 3 separate Payment Bond in an amount equal to five percent (5%) of the Total Project Capital Cost with respect to Construction Work and separate Performance Sec wily in an amount equal Lo twenty-five percent (25%) of the Total Project Capital Cost, as are required prior to issuance of NTP2 pursuant to Section 5, 6, 1, 1.
[Filing No. 33-3 at 28.] The PPA defines “Total Project Capital Cost” as follows:
Total Project Capital Cost means the total capital cost for the Project set forth in Exhibit 2-1(2) [Capital Cost Table) lo the Agreement. For purposes of Section 17.2 of the Agreement, the term "Total Project Capital Cost" includes casts associated with both D&C Work and O&M During Construction.
[Filing No. 50-4 at 72.] The PPA defines “D&C Work, ” “Design Work, ” “Construction Work, ” and “Work” as follows:
D&C Work means the Design Work and Construction Work, including those obligations of Developer pertaining to design and construction set forth in the Technical Provisions
Design Work means all Work of design, engineering or architecture for the Project, Project Right of Way acquisition or Utility Adjustments.
Construction Work means all Work to build or construct, reconstruct rehabilitate, make, form, manufacture, furnish, install, integrate, supply, deliver or equip the Project and/or the Utility Adjustments. Construction Work includes Aesthetics and Landscaping Work and Standard Landscaping and Aesthetics Treatment Work,
Work means the work required to be furnished and provided by Developer under the PPA Documents, including all administrative, design, engineering, real property acquisition and occupant relocation, construction. Aesthetics and Landscaping Work, Rehabilitation Work, Utility Adjustment, utility accommodation, support services, financing services, operations, maintenance and management services, except for those efforts which such PPA Documents expressly specify will be performed by Persons other than Developer-Related Entities.

[Filing No. 50-4 at 16; Filing No. 50-4 at 18; Filing No. 50-4 at 21; Filing No. 50-4 at 75.]

         B. The Design-Build Contract

         On April 8, 2014, the Developer entered into a Design-Build Contract (the “DBC”) with an entity that ultimately assigned its obligations to Isolux-Corsán.[4] [Filing No. 33-4 (the DBC); Filing No. 33-1 at 2.] The DBC recognizes that pursuant to the PPA, the “Developer is authorized and has agreed to undertake to design, construct, finance, operate and maintain the Project.” [Filing No. 33-4 at 10.] The DBC recognizes that Isolux-Corsán was “selected by IF A to design, construct, finance, operate and maintain the Project.” [Filing No. 33-4 at 10.] The DBC contemplates Isolux-Corsán entering into subcontracts with contractors to facilitate the Project. [Filing No. 33-4 at 11.] The DBC requires Isolux-Corsán-as the “Design-Build Contractor”-to obtain payment security as follows:

         17.2 Payment and Performance Security

17.2.1. Design and Construction Security Requirements. As a further condition precedent to commencement of any Construction Work and O&M During Construction, Design-Build Contractor shall have obtained, delivered to IFA and maintain the Payment Bond and Performance Security required under Section 17.2, 1 of the PPA securing Developer's obligations under the PPA, in the same amounts and forms and having the same terms required for the Payment Bond and Performance Security required of Developer by Section 17.2.1 of the PPA, and which shall, at a minimum, remain in full force and effect up to and including (a) with respect to the Payment Bond, Final Acceptance and (b) with respect to the Performance Security, the date that is one year after Substantial Completion. The requirements of Section 17.2.1 of the PPA shall apply to new, reconstructed or rehabilitated improvements during the Term, and any other D&C Work Design-Build Contractor performs for which a bond is required under IC 8-23-9. Prior to ...

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